Yahoo! PPC introduces Quality Index in Australia
Previously the old Overture system was a simple bid rate to determine rankings based on other advertisers bids, so that you could 'slot' your ads into a chosen position based on the current bid rates. Now, the upgraded Yahoo! Search Marketing system is replicating the Google AdWords system, whereby the position of an advert will be based on a Quality Index, derived from a combination of the bid amount and a 'quality score'. This quality index is based on historical activity for the advert as well as expected performance based on broader search and advertiser data that Yahoo! will use to determine likely rankings and clickthrough activity.
This change means that PPC advertisers can run their Yahoo! campaigns in a similar way to Google AdWords, so that keyword, advert and potentially landing page quality will help improve ranking performance and reduce the bid prices that may be necessary to achieve higher positions than competitors. This all goes to improve the 'user experience' but it's also Yahoo! playing catch-up with Google.
Here's more information about Yahoo!'s Quality Index.